We are mindful of significant uncertainty facing Canada's economy in the next few years, as a patchy US recovery and a high reliance on oil-related investment point to considerable economic headwinds.
Canada's Liberal Party government will struggle to maintain its reform momentum over the coming years.
Key Forecast Changes
We have lowered our policy rate forecast to 1.00% from 1.25% by end-2017, as the central bank will be mindful of heighten global economic uncertainty.
We have revised up our average exchange rate forecast to CAD1.30/USD from CAD1.34/USD in 2016 and CAD1.29/USD from CAD1.34/USD in 2017 after upward revisions to our oil price outlook
Heightened global economic uncertainty and the risk of a US recession could delay Canada's ongoing rebalancing process and dent it's longer-term growth prospects.
High levels of household debt and a frothy housing market are sources of potential instability in Canada's financial sector and overshadow the longer-term economic outlook.
|e/f=BMI estimates/forecasts. Source: National Sources/BMI|
|Real GDP growth, % y-o-y||2.5||1.2||1.4||2.0|
|Nominal GDP, USDbn||1,761.5||1,530.4||1,552.9||1,637.7|
|Consumer price inflation, % y-o-y, eop||1.5||1.6||2.0||2.2|
|Exchange rate CAD/USD, eop||1.16||1.38||1.29||1.28|
|Budget balance, % of GDP||0.1||-0.2||-1.4||-1.4|
|Current account balance, % of GDP||-2.3||-3.4||-3.0||-2.6|
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